Consumer Cellular Being Sold To A PE Firm

The private equity firm GTCR is planning to purchase a majority stake in the carrier Consumer Cellular for 2.3 billion dollars. With roughly four million subscribers, the purchase price comes out to over $500 per subscriber. The deal is expected to close in late 2020.

I don’t know what source Mike Dano of Light Reading is relying on, but he seems to have insights into the details of the sale:

After a bidding war that involved Dish Network, Altice USA, Ultra Mobile, a group led by Boost Mobile founder Peter Adderton and others, Chicago private equity company GTCR has purchased Consumer Cellular for around $2.3 billion.

A year of acquisitions

The wireless market in the U.S. has seen a lot of movement lately. Sprint, Ting, Boost, Consumer Cellular, and a whole bunch of brands owned by TracFone have either been acquired in the last year or are in the process of being acquired.

The latest deal with Consumer Cellular presents interesting contrasts with the acquisition of Boost Mobile. DISH paid about 1.4 billion for roughly 9 million Boost subscribers. The cost per subscriber in the Boost acquisition came out to about $150, roughly one-fourth of the cost per subscriber in the Consumer Cellular acquisition. Consumer Cellular’s lower churn rate may explain some of the discrepancy.

Rumors About A Potential Consumer Cellular Sale

Earlier this week, Mike Dano of Light Reading reported on rumors about Consumer Cellular:

Consumer Cellular – one of the nation’s largest MVNOs – is in discussions with other companies for a potential sale, according to two people familiar with the issue. The discussions appear to be in the early stages, and may not result in a transaction.

An acquisition of Consumer Cellular’s roughly four million subscribers would be big news. The new rumors combined with Ting’s sale of its subscriber base earlier this month raise the possibility that MVNOs are feeling squeezed.

As Sprint folds into T-Mobile, network operators may be increasing what they charge MVNOs for network access. MVNOs may also worry their offerings will become less competitive as DISH enters the marketplace. The CEO of Ting’s parent company, Elliot Noss, suggested something along those lines:

For many quarters now, I have discussed the outlook for Ting Mobile within the context of how DISH enters the market and what that would mean for the industry competitively. I absolutely believe that they will be very aggressive with pricing, which has two implications for our announcement. First, it would make remaining as a retail MVNO that much more difficult. Second, it will make their entry into the market that much more successful. The net result is that DISH is well positioned to disrupt the US mobile market.